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Portland tech startup matches empty positions to skilled laborers with a new algorithm

There's a shortage of skilled workers, according to everyone trying to fill jobs here in Portland during the building boom, but this new tech startup matches employers to employees with algorithms better than a temp agency and has plans to match training programs with the skill gap.

WorkStep is a career development network for hourly workers and employers, providing workers with a transparent job marketplace including access to information about wages, commute times, benefits, duties, core attributes and advancement opportunities — all things not offered by traditional temp agencies, which also take a cut of the worker's pay (WorkStep does not).PAMPLIN MEDIA GROUP: JON HOUSE - WorkStep founder Dan Johnston at the Oregon Food Bank, where he and his team recently volunteered.

"We provide a direct hire on-demand platform that enables (businesses) to really have access to qualified applicants for their roles without the need to go through a temp agency or post the roles on Craigslist," Dan Johnston, CEO and founder of WorkStep, told the Tribune. "We exist to help this portion of the workforce that's been left behind, or negatively impacted, by tech advancement today. It's a really interesting problem and we're hoping to solve it."

The employers on WorkStep are primarily industrial places such as warehouses and logistics.

With unemployment in Portland at historic lows, local businesses are hurting more than ever to source and hire talent. On the other side of the market, the skyrocketing cost of living means workers need better opportunities, faster placements and more money in their paycheck. WorkStep uses transparency, efficiency and coaching to empower both parties.

"From a worker's perspective, it's about ease of use, transparency and being able to use one profile to apply to any job," Johnston said. "Then on the employer side, it's similar: we have 'hiring Portland,' where a hiring manager can list needs and requirements and review WorkStep profiles one at a time to make a decision whether this is somebody you'd like to speak to or not."

WorkStep was founded in Portland almost exactly one year ago, and today is actively hiring for more than 40 companies including Reser's Fine Foods, Fred Meyer, Leupold & Stevens and Les Schwab.

"We've worked with more than that over our history, and we have signed up 35,000 workers in Portland on the platform, which is a very large percentage of the industrial workforce we've estimated might be about 100,000 workers in these spaces around the Portland area," Johnston said. "One-third of these have a complete WorkStep profile: work history, skills, experience, what they're looking for, where they're looking for — our placements have earned more than $5 million in their own pockets, and it's exponentially increasing."

WorkStep employs nine full-time workers currently and will soon add three more over the coming months. It serves Portland to Salem, and roughly 50 miles in every direction so far.

"We have had some employer partners ask us very nicely if we could help them out in other areas more remote," Johnston said. "We work with Les Schwab in Prineville, we work with a pro facility in Bend, but Portland is our focus."

Later this season, WorkStep plans to launch in Seattle.

"A lot of the things we're doing under the hood is innovative in terms of tech layers," Johnston said. "What we're doing is building a marketplace that relies on complete transparency on both sides — every candidate stands up their profile, is validated and says here's who I am and what I've done, and that's something that's never existed in this marketplace. It's fully transparent to make these matches happen."

Tech, not temp

WorkStep is different from temp agencies in a number of ways.

"We are never the employer of the worker. We've found when a temp agency rents you a workforce, there are a number of issues," Johnston said. "They're marking up the wage: what a worker sees at the end of the day is traditionally less than a temp agency placing someone who makes minimum wage, likely charging the employer $16-17 per hour."

WorkStep only makes direct placements with complete transparency.PAMPLIN MEDIA GROUP: JON HOUSE - Johnston at the Oregon Food Bank, where he and his team recently volunteered to give back. WorkStep recently moved into its new office in the World Trade Center.

"We're telling them you could work at Les Schwab, here are the jobs, here's where they are, the wages, the benefits, and that engenders trust in the sense that a traditional agency might hide things until the last second — tell you here are warehouse jobs, and you get more details your first day," Johnston said.

The mobile web product allows workers to build a WorkStep profile, which can be filled out quickly on a cell phone with skills, experience and resume uploads.

"We use tech to parse that and automatically generate their profile," Johnston said. "That profile can be used to apply to any employer on the WorkStep platform — you want to apply to drive a truck for Fred Meyer distribution, Kroger, delivery, you can do all of those without ever needing to go fill out your work experience again on a company's website."

WorkStep handles the attributes of scheduling as users move through the process and tunes its algorithms through matching.

"You're making a lot of decisions on a daily basis and our platform finds out why, if you don't move forward with interviewing a candidate, to fine-tune whom you're being presented with," Johnston said.

He says serving the Portland area is just the beginning of where he plans to innovate.

"And over time, look more at how do you better match supplies in the end by serving the ability to upscale a workforce, relocate a workforce," Johnston said. "The Portland construction boom is hampered by a lack of skilled workers and in a number of industries like this, skills are dragging. We'd like to be able to offer the ability to upskill or reskill our workforce to better serve our employer needs."

He's working on putting partnerships in place with workforce development initiatives and organizations to train workers with new skills.

"We're exploring a bunch of different models," Johnston said. "What we're doing right now is really interesting in the sense of adding value for workers and for our employer partners, but we think that over time this ability to really help workers sort of navigate their entire career trajectory is very much, from a mission perspective, where we like to be."

Warehouse to tech

Back in 2008, Johnston managed a warehouse in Tualatin.

"That, when I started managing there, relied on temp work," Johnston said. "It both concerned and fascinated me: we'd bring in workers for a day — the agency Labor Ready still exists — at $16 an hour, then the worker would get $11. This basically mysterious force would get a third of the expense without doing what we do, or any of the work."

So, he fixed it.

"At that time, we transitioned the warehouse and instead of paying the agency $16 and the worker $11, we just hired workers and paid them $13," Johnson said. "It seemed like a win-win-win — except for the agency, in that case."

Johnston moved on in his career and began working in tech. He entrepreneuerd a couple of tutoring marketplaces in San Francisco, Boston and New York, connecting college students to high schoolers in the community who needed tutoring.

"That business led to the idea that basically there was no need, no reason why somebody in Omaha shouldn't be able to work with a tutor going to school at Stanford, so we built an online platform to facilitate on-demand online tutoring," Johnston said.

He ran that business from 2012 to 2014, when it was acquired.

"I started out in warehouse space, went into tech, and this is now the uniting of the two," Johnston said.

PAMPLIN MEDIA GROUP: JON HOUSE - WorkSteps Alan Sheu helps sort frozen food at the Oregon Food Bank.Although his other startups were in larger cities, WorkStep's office was at first in San Francisco — even though it was founded and serves here in Portland. Recently, it moved its headquarters into the World Trade Center at 121 S.W. Salmon St.

"I thought a lot about, why Portland first for this particular business?" Johnston said. "Having grown up in Portland in the '90s, I've been a first-hand witness to how much it's changed over time. It's become a lot more challenging to live a comfortable life as a relatively low-wage worker — housing pricing has gone way up, wages haven't quite followed, and it presents a lot of challenges — especially if another tax is layered on your work, or if it takes you longer than you'd like to find work near home."

Commute times are a major factor in the cost of working certain jobs — and the time cost on work-life balance.

"Earning $15 an hour, how much you spend to get to work really matters in terms of take-home," Johnston said. "Companies foundational to the economy — grocery stores, producers, construction companies — are really struggling to keep business moving given the current climate."

One of WorkStep's clients is Phoenix Fruit & Beverage, Inc., a large Pacific-coast produce producer.

"Running a business like that is labor intensive and for a relatively low margin, has become exceedingly more challenging in the Portland market over the past decade," Johnston said. "It's a fascinating opportunity to solve both sides with tech."

By Jules Rogers
Reporter, The Business Tribune
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